Investment Banking vs Corporate Banking

Updated on May 2, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Difference Between Investment and Corporate Banking

It is very important to know the professions you want to pursue thoroughly. Knowing both the pros and cons can help better compare the occupations. Furthermore, one should choose the job carefully as it depends on it. For example, investment banking helps create capital rather than handle it, while corporate banking involves banking services, including loans, especially to companies. Therefore, a career in investment banking would include being in the limelight and earning more than a career in corporate banking.

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What is Investment Banking?

Investment banking involves: –

Investment banks act as an intermediate while raising capital funding. Investment banking involves two main sides vis-à-vis the selling and buying sides. The selling side includes trading securities or monetary gain or portfolio gain, and it also involves promoting securities or research and underwriting. In contrast, buying involves giving clients sound advice on investment services.

Investment Banking firms are of three types – Bulge Bracket Investment Banks, Middle Market Investment Banks, and Boutique Investment Banking Firms.

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What is Corporate Banking?

Corporate banking is also known as corporate financing. Corporate banking caters to large-scale companies and businesses. They focus on various banking services like issuing loans, setting up portfolios, and helping MNCs by giving them options for lowering their taxes.

We can say that a corporate banker closely studies his clients’ portfolios and ensures that financial risks minimize. There are numerous opportunities for commercial banks. You can work in many positions: Credit Analyst, Loan Officer, Branch Manager, Trust Officer, and Mortgage Banker.

Investment vs Corporate Banking – Prerequisites

If you are an undergrad, you should pursue an MBA from a business school and enter the investment banking sector as an associate. The skills you would want to teach yourselves include an in-depth understanding of corporate finance, quick calculation skills, and organizational analysis. In addition, excellent communication skills are a must for a candidate looking forward to a career in investment banking.

A qualification in a subject such as law, business studies, management, accountancy, finance, mathematics, or economics can be advantageous, as can an MBA or similar professional qualification for having opportunities in corporate banking. Additional skills required for a career in corporate banking include numeracy skills, solving problems, negotiation skills, and working under pressure.

Employment Outlook

There are many positions to acquire in the investment banking sector, including: –

Investment Banking Positions
  • Analyst: The analyst is the basic profile in investment banking. An analyst’s main roles involve creating financial models, performing a company analysis, doing due diligence, and creating pitch books, and punching data. You must have at least 1-year experience as an analyst before applying for the associate post.
  • Associate: The main job roles of an investment banking associate are similar to that of an analyst except for the additional responsibility of acting as an intermediate between junior and senior bankers. You are required to be an associate for 3 or 4 years before being promoted to the post of Vice President.
  • Vice President: The main job roles of an investment banking associate are almost similar to that of an analyst except for the additional responsibility of acting as an intermediate between junior and senior bankers. You are required to be an associate for 3 or 4 years before being promoted to the post of Vice President.
  • Managing Director: Managing Directors are usually highly experienced candidates representing the firm in foreign countries and important meetings. He has the power to make all the strategic decisions of the company.

Unlike investment banking, there are no levels in corporate banking. Still, one can work in the following positions: –

Corporate Banking Positions
  • Loan Officer: A loan officer decides whether a client is eligible for a loan or not. He monitors the customer’s financial conditions and gives him the best suitable loan.
  • Branch Manager: Major job roles of a branch manager are supervising employees, taking care of the smooth selling and delivery of financial services, and maintaining business relationships.
  • Trust Officer: The main focus of a trust officer is areas like trust services, estate planning, taxes, investment, etc.

Compensation

Recent research shows that investment bankers earn more money than corporate bankers. For example, an analyst in investment banking can earn as much as $70,000 as their base salary. As an associate, your basic compensation would be $100,000. A Vice President would accumulate $250,000.

Entry-level jobs in the corporate banking sector will pay you $30,000 to $40,000 per year. However, having three years of experience can increase the compensation from $54,000 to $86,000.

Investment and Corporate Banking – Pros & Cons

Investment Banking
ProsCons
Handsome payLong working hours
LimelightCutthroat competition
Steep learning curve
Corporate Banking
ProsCons
Flexible working hoursCompensation is hard-earned
Easy exit optionsNo appreciation
Defined career path

Investment Banking vs Corporate Banking Video

Conclusion

There are intense competition in investment banking jobs. Still, a decent salary can compensate for this, while in corporate banking jobs, one can enjoy flexible working hours, and there is not much competition, but compensation has to be earned and does not come with the degree. Therefore, it is not easy to choose between both professions.

Those who want to enjoy their weekends over handsome pay can opt for a career in the corporate banking sector, and those who value money and can spend their day and night getting rich must opt for a career in the investment banking sector. Also, you may be in the limelight and appreciated in investment banking jobs, while corporate banking jobs are dull, and you will not get much recognition. The choice is entirely yours to make.

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This article is a guide to Investment Banking vs Corporate Banking. We compare the difference between investment banking and corporate banking, etc. We also discuss employment outlook and investment and corporate banking compensation. You may also have a look at the following articles: –

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  1. Rahul Laxman Bahirwade says

    It’s was very nice session today.

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